European Markets Extend Losses to 5th Day, UK-Italian Bond Yield Spread Narrow

Bridgette Randall
11 Oct, 2022
Frankfurt

European markets extended losses for the fifth day in a row on the rising tensions in Ukraine. 

Investors are worried that the aggressive rate tightening is likely to depress corporate earnings and dip the economy into a recession and inflation may remain elevated longer than expected. 

The DAX index declined 0.4% to 12,220.25, the CAC-40 index decreased 0.1% to 5,833.20 and the FTSE 100 index dropped 1.1% to 6,885.23.  

The euro traded near 97.77 U.S. cents and the British pound closed at $1.117. 

The yield on 10-year German government bonds rose to a 11-year high and the Bank of England expanded its bond market intervention to include inflation-linked bonds. 

German bund yields rose after reports suggested that German Chancellor Olaf Scholz is prepared to back European Union-wide joint debt issuance to tackle the surging costs of energy imports. 

G7 leaders conducted a virtual meeting and discuss additional steps after Russia stepped up its bombing across Ukraine following an attach on a bridge linking Ukraine and Crimea. 

The yield on 10-year German bonds was nearly unchanged at 2.29%, French bonds closed down 2.885%, British Gilt at 4.41% and Italian bonds to 4.663%. 

Brent crude oil declined 1.8% to $94.49 a barrel and TTF natural gas price edged up a fraction to 154.50 euros a megawatt hour. 

The UK jobless rate fell to the lowest level since 1974 after more people dropped out of the labor force and employers struggled to fill vacancies. 

The UK jobless rate declined to 3.5% in the three months to August from 3.6% in the period to July, the data from the Office for National Statistics reported Tuesday.